Commercial law Review Quiz

1. Stockholder's Right to Vote (7 Instances)

the holders of such shares shall nevertheless be entitled to vote on the following matters:
a. Amendment of the articles of incorporation;
b. Adoption and amendment of by-laws;
c. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate property;
d. Incurring, creating or increasing bonded indebtedness;
e. Increase or decrease of capital stock;
f. Merger or consolidation of the corporation with another corporation or other corporations;
g. Investment of corporate funds in another corporation or business in accordance with this Code; and
h. Dissolution of the corporation.

2. Instances where one can exercise Appraisal Right

Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of his shares in the following
instances:

a. In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or
class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening
the term of corporate existence;

b. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property
and assets as provided in the Code; and

c. In case of merger or consolidation.

3. Distinguish Stock Corp. vs. Non-Stock Corp. (see Sec. 87)

Stock Corporation No-Stock Corporation

Existence of Capital Stock Capital Stock
Has capital stock divided into shares (CC,
Sec. 3)
Purpose Organized for profit.
Distribution of Profit Profits are distributed to the stockholders
through dividends (CC, Sec. 3)
Number of Directors or Trustees Not less than 5 but not more than 15.
Except corporation sole and banks (in case
of merger or consolidation) which can have
a maximum of 21 directors
Term of Office of Directors Term of one year until their successors are
elected and qualified, subject to the
provisions of AOI and By-laws
Place of meeting Stockholders meeting shall be held in city
or municipality where the principal office
of the corporation is located or at the
principal office of the corporation
Right to vote Stockholders can resort to cumulative
voting.
No capital stock.
Non-stock corporations has capital is in the
form of contributions or donations.
Not organized for profit.
Profits are not distributed to members.
Any profit earned by the non-stock
corporation is used for the furtherance of
the purpose or purposes for which it is
organized. (CC, Sec. 87)
Not less than 5 and may be more than 15
except Non-stock educational institutions
(maximum of 15 trustees).
Subject to the provision in AOI and By-laws,
3 years on a staggered basis
May be held at any place outside the
principal place of business of the
corporation provided it shall be within the
Philippines
No cumulative voting unless allowed by
AOI.

Only preferred and redeemable shares can Right to vote may be limited, broadened or
be denied the right to vote except those denied by the AOI and by-laws. (CC, Sec.
matters in Sec. 6. 89)

Voting of directors may be made only Regional or district voting of trustees is

through general voting. Regional or district allowed
voting of directors is not allowed

Transferability of Shares/ Membership Shares may be transferred by the Membership is personal in character and is
stockholder with or without the consent of not transferable unless allowed by the AOI
the corporation or bylaws. (CC, Sec. 90)

Right to expel members Stockholders may be expelled only for Membership shall be terminated in the
grounds provided by law. manner and for the causes provided in the
articles of incorporation or the by-laws.
(CC, Sec. 91)
Distribution of Assets in case of dissolution Assets of stock corporation shall be
distributed in the following order:
1.Payment of claims of creditors who are
not stockholders (based on preference of
credit) 2.Payment of claims of stockholders
as creditors 3.Residual balance is
distributed proportionately to preferred
shares, if any, then to common stock.
Assets of non-stock corporation shall be
distributed as follows: 1. Payment of claims
of creditors
2. Assets held on condition of return or
subject to limitation of use shall be
returned, transferred or conveyed.
3. Distribution to member based on
distributive rights stated in AOI or by-law.
4. In case of default, distribution pursuant
to Plan of Distribution of Assets.

5. Distinguish foundation from a Religious Organization

6. What constitutes "Doing Business"? (Foreign Corporations) (See Mentholatum vs. Mangaliman, 1941

[The test is] whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized or
whether it has substantially retired from it and turned it over to another. The term implies a continuity of commercial dealings and
arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident
to, and in progressive prosecution of, the purpose and object of its organization.